The fit between Russian culture and compensation

Abstract

Western firms that depend on Russian nationals to help operate their businesses in Russia need to find effective ways of designing compensation packages to attract, motivate, and reward these valuable employees. This article proposes that several important aspects of Russian culture should be taken into account. An overview of Russian culture and a discussion of the way it was embedded in compensation systems during the Communist period are presented as background, using Hofstede's five dimensions of culture as a framework. Two surveys of Western firms' compensation policies for Russian nationals are then discussed in light of Russian culture. The article concludes with culturally based guidelines to assist Western firms in developing effective compensation plans for Russian employees.

Organizational leadership in Central Asia and the Caucasus: Research considerations and directions

“…These authors further observed that the region's distinct cultural characteristics also include high power distance and high collectivism. Moreover, other scholars have suggested that communist countries also had a preference for high uncertainty avoidance (Hofstede, 1997;Puffer & Shekshnia, 1996;Luthans, Peterson, & Ibrayeva, 1998;Elenkov, 1998;Fey et al, 2001;Fey 2005). Such a cultural background, along with the communist heritage of bureaucratic management, has encouraged a legacy of powerful leaders and passive followers in the region (Kets de Vries, 2001;Luthans, Peterson, & Ibrayeva, 1998).…”

“…Moreover, the socio-political and cultural environment is characterized by high power distance, high collectivism, high uncertainty avoidance, and socio-political corruption (e.g., Bakacsi et al, 2002;Puffer & Shekshnia, 1996). The prevalence of economic, political, and social crises, along with the communist legacy of bureaucratic routines, has resulted in passive followers, who have desire and preference for strong leaders who can be relied upon to guide them through the uncertain and difficult phase (Kets de Vries, 2001;Luthans, Peterson, & Ibrayeva, 1998).…”

Temporal Relationships Between Individualism–Collectivism and the Economy in Soviet Russia

“…Paretskaya (2010) suggests that capitalism is not only an economic organization, but a broader cultural system, in the same way as is Quantitative and qualitative IC spectrum research on Russia appears to differ in conclusion, suggesting that a single IC scale is over-simplistic. Quantitative research using Hofstede's cultural dimensions questionnaire, collected after the collapse of the Soviet Union, typically portrays Russia as having low to moderate levels of individualism (Welsh et al 1993;Bollinger 1994;Veiga et al 1995;Puffer & Shekshnia, 1996;Bradley 1999). Hisrich & Grachev (1993) claimed that Soviet Russia was highly collectivist, because it promoted the interests of the state, while Holt, et al (1994) argued that Russians were indoctrinated into the socialist value system and that the individual had little freedom to make decisions, making it a collectivist society.…”

Human Resource Issues in Russia

“…Since workers received incentives regardless of individual performance, they came to see them more as an entitlement than as a reward for good performance (Puffer & Shekshnia, 1996). Many of the individuals we worked with are still grappling with the idea of individual performance incentives.…”

“…Not only do such systems go against the traditional approach, they may also contradict inherent aspects of the Russian culture, such as collectivism and high uncertainty avoidance. (For a more complete discussion of the cultural aspects of compensation in Russia, see Puffer andShekshnia, 1996, andSchuler andRogovsky, 1998. ) …”